ISIN Code Breakdown
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An ISIN, or international securities identification number, is a 12 digit number used to identify equity and debt related securities like stocks, bonds, derivatives, treasuries, medium term notes, commercial paper, warrants, futures and other financial instruments on a global level. It is a globally adopted standard for trading and settlement that is provided by International Organization for Standardization (ISO), of which ISIN.com can assist with your application needs. This unique ISIN code is different from other securities identifiers like ticker symbols which do not consist of worldwide recognized identification marks. These ISIN codes are used to remove ambiguity between the trading stocks and bonds of a company in various countries. Say for example, the ticker symbol of a company being traded publicly in the US may be entirely different from the same particular company being traded publicly on the Tokyo stock exchange in Japan. In these circumstances the trading between the companies of two countries can be a difficult task if there is no common standard for the identification of securities. But, this cumbersome issue is resolved due to the introduction of ISIN codes which has eliminated the cross border errors and has made securities related information exchange much easier between two countries.
Role of ISIN codes in financial dealings
ISIN codes are used with a global aim of streamlining the securities identification process through a unified system and a common classification. ISIN codes are different from the 9 digit CUSIP numbers and consist of a 12 digit alphanumeric number. One of the important features of these codes is that they are used for the unification of ticker symbols from one exchange to another.
Structure of the ISIN code
This 12 digit ISIN code is mainly divided into three main parts and this individual part has their own significance in the finance and trading sector. Let us now discuss the structure of this ISIN code and its fragmentation in different parts.
– The first two characters in this 12 digit ISIN code belongs to the country code which describes the home country, registered country or the country in which the stock of that company is located.
– The second 9 digit part of this universal stock serial number is known as identifier. This identifier also known as National Securities Identifying Number (NSIN).
– The last single digit of this universal security identifier code is known as check digit for checking and controlling the counterfeiting or forgery cases.
– This code also consists of a special alpha numeric code called as “XS” which is used by different agencies that have the authority to allocate ISINs. Some of these organizations are Clearstream, CEDEL, Euroclear and others.
Reasons for adopting ISIN codes
- It provides a simple, clear and uniform method for securities clearance and settlement.
- It allows easy tracking of stock holdings of various investors in a universal accepted format that is used across various countries.
- It makes clearance and settlement of the transactions faster through electronic means and prevents human interference.
The usage of ISINs continuously grows. Contact us for any questions or if you need assistance.